In the last week of June a colleague told me that in the past week or two he’d noticed SOLD stickers starting to appear on some long-standing FOR SALE signs in a couple of near-city southern suburbs.
A day later Perth’s real estate industry was sent into a tizz by BIS Shrapnel’s prediction that median prices would climb by almost 20% over the three years to mid 2014.
There was a degree of support for this view from RP Data research director Tim Lawless who was reported as saying that while he did not expect any growth over the next six months, from next year the timing would be right for price increases of up to 9 % per year.
Three industry commentators disagreed finding BIS Shrapnel’s view to be too optimistic.
However, what was most significant about this little spat was that for the first time in many months we saw dissention among real estate specialists on the future course of the market. Ask yourself, when last did you see an optimistic opinion on property in a newspaper anywhere in Australia?
Are a few SOLD stickers or differences in the opinions of experts the first signs of a hesitant but significant change in the real estate market? Only time will tell. However, a few recent announcements have given some cause for hope.
Recently the Australian Bureau of Statistics (ABS) reported that the number of home loans approved in Australia in April rose 4.8% to a seasonally adjusted 47,347. This was well above market expectations.
We all know by now that factors such as the health of the economy, continued population growth, the low jobless rate and further growth in the resources sector are having little effect on buyers determined to sit on their hands, pay off debt and save.
The problem is that one missing ingredient ,– confidence.
The lack of confidence may well be due to the fact that there doesn’t seem to be much airing given to the bright notes.
For example, are you aware of the following…
- Recently there was an important pointer to a possible improvement in consumer sentiment with ABS figures showing that consumer spending grew at its quickest pace in almost two years in April. Retail sales rose 1.1% to $20.74 billion in April, from $20.51bn billion in March.
- The May release of the Westpac-Melbourne Institute Index of Consumer Sentiment showed a small increase in the number of people who said the time was right to buy a dwelling.
- One area often cited as among the major reasons for the lack of interest in property is interest rates. Few will disagree that statements by the Reserve Bank on possible future interest rate rises do put a damper on confidence and the demand for property.
However, it’s interesting that Westpac recently cut its fixed term interest rates. It may be a short term competitive strategy, but experience shows that banks don’t cut their fixed rates if they expect the RBA to push up its cash rate in the near future. Could that mean Westpac thinks interest rates have peaked?